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SUBSEQUENT EVENTS
 9 Months Ended
Sep. 30, 2024
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS SUBSEQUENT EVENTS
The Company evaluates subsequent events in accordance with ASC 855, Subsequent Events. The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.
Recent Acquisitions
On October 1, 2024, the Company acquired two SNFs and one multi-service campus in Maryland for $55.5 million, which includes estimated capitalized acquisition costs. In connection with the acquisition of the facilities, the Company entered into a new master lease with a skilled nursing operator. The new master lease has an initial term of approximately 15 years, with two five-year renewal options and CPI-based rent escalators. Initial annual cash rent under the new master lease is $5.2 million.
Recent Investments
On October 1, 2024, and in connection with the $55.5 million skilled nursing acquisition described above, the Company extended a $19.2 million mortgage loan to a skilled nursing operator. The loan is secured by a first priority ground leasehold mortgage lien on a SNF located in Maryland and bears interest at an initial annual rate of 9.35% with annual CPI-based escalators, payable monthly. The mortgage loan has a term of 15 years and is set to mature on September 30, 2039, with two five-year extension options. The mortgage loan provides for a put option, giving the borrower the right to require the lender to purchase the underlying ground leasehold and property associated with the mortgage loan. The exercise window for the put option is 30 days prior to the maturity date. The mortgage loan also provides for a purchase option in favor of the Company (subject to certain requirements) with two exercise windows. The first exercise window is on or before October 1, 2026. The second purchase option window opens January 1, 2039, and remains open for 6 months.
On October 1, 2024, the Company extended a $9.8 million mortgage loan to a skilled nursing real estate owner. The loan is secured by a first priority mortgage lien on a SNF located in Colorado and bears interest at a fixed rate of 8.5%, payable monthly. The mortgage loan is set to mature on September 30, 2034. The mortgage provides a one-year extension option and may (subject to certain restrictions) be prepaid in whole, after the 18th month following the loan closing, for an exit fee ranging from 0% to 2% of the loan plus unpaid interest payments.
Entry into a Material Definitive Agreement
On October 29, 2024, in connection with a joint venture arrangement (the “Tennessee JV”) between the Operating Partnership and an unaffiliated third party, the Operating Partnership became bound by the terms of an Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which the Tennessee JV has agreed to acquire 31 skilled nursing facilities (the “Tennessee SNF Facilities”) for an aggregate purchase price of approximately $500 million, exclusive of transaction costs. In connection with the Tennessee JV’s acquisition of the Tennessee SNF Facilities, the Operating Partnership is expected to
contribute approximately $442 million toward the aggregate purchase price to the Tennessee JV and, in exchange, the Operating Partnership will own 100% of the preferred equity ownership interests in the Tennessee JV representing 92.5% of the total investment and 50% of the common ownership interests in the Tennessee JV representing 3.75% of the total investment. The Tennessee SNF Facilities consist of a total of 3,290 licensed beds, with 30 of the facilities located in Tennessee and one in Alabama. The Company has contributed $8.5 million to the Tennessee JV, which was used to partially fund the earnest money deposit under the Purchase Agreement.
Completion of the Tennessee JV’s acquisition of the Tennessee SNF Facilities is subject to customary closing conditions, and is expected to close in two phases during December 2024. At closing, the Tennessee SNF Facilities are anticipated to be operated by affiliates of PACS Group, Inc. (twelve facilities), Ensign (nine facilities), and Links Healthcare Group (seven facilities), who are all current tenants of the Company, as well as one new operator relationship (three facilities), under long-term master leases. Three of Ensign’s nine facilities will be acquired by Ensign’s real estate subsidiary with the remaining six to be included in a new master lease. Initial annual base rent to the Tennessee JV relating to the Tennessee SNF Facilities is expected to aggregate approximately $44.4 million.